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The idea of having a well-organized stock market and to
speed up the process of industrialization of the country dates back to 1930's
when Bank Melli Iran started a study about the subject. A report completed in
1936 worked out the details for the formation of a stock market and laid down
the preliminary foundation to proceed with the plan.
The outbreak of the World War II and subsequent economic and political events
delayed the establishment of the stock exchange upto the year 1967 when the
Stock Exchange Act was ratified. The Tehran Stock Exchange opened in April
1968. Initially only Government bonds and certain State-backed certificates
were traded in the market. During 1970's the demand for capital boosted the
demand for stocks. At the same time institutional changes like the transfer of
shares of public companies and large private firms owned by families, to the
employees and the private sector led to the expansion of the stock market
activity. The restructuring of the economy following the Islamic Revolution
expanded public sector control over the economy and reduced the need for
private capital. At the same time the abolishment of interest-bearing bonds
terminated their presence in the stock market. As a result of these events,
Tehran Stock Exchange started a period of standstill.
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This stop came to an end in 1989 with the revitalization of the private
sector through privatization of state-owned enterprises and promotion of
private sector economic activity based on the First Five-year Development Plan
of the country. Since then the Stock Exchange has expanded continuously.By the
end of 2002, a total of 324 companies with a market capitalization of 114,397
billion Rls were listed in Tehran Stock Exchange. The TSE Council is the
highest authority in the stock exchange. State officials as well as the private
sector representatives and specialists are members of the Council. The Governor
of the Central Bank presides over the Council. Other constituent organs of TSE
are Acceptance Committee, Arbitration Board and Brokers Organization. The Board
of Directors of the latter is the highest policy-making authority in TSE and
appoints the secretary general as the chief executive officer, CEO, for a
period of two years. Re-appointment is permitted without any restriction. There
are two Senior Deputies acting under the Secretary General who are responsible
for economic and technical affairs and administration and finance respectively.
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At the beginning of 2001, TSE has 55 registered brokers and 151 employees.
Trading in TSE is based on orders sent by the brokers. Trading hours are
09:00-12:30 Saturday to Wednesday, with the exception of public holidays.
Settlement period is T+3 and TSE aims at reducing the period. A CDS is
operating in TSE and clearing process is automated. TSE Services Company,
TSESC, who is in charge of computerized site, supplies computer Services.
Presently,TSE trades mainly in securities offered by listed companies. The
introduction of project-based participation certificates that bear a fixed
annual return during the period of the project and promise the final settlement
of the profit at the date of its completion, has diversified the market. TSE is
a full member of
FIBV,
a founding member of Federation of Euro-Asian Stock Exchanges (
FEAS).
TSESC is a member of ANNA.
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